Bank of Ireland shareholders have approved the terms of a share issue which is seeking to raise €1.9 billion to strengthen the bank's capital position.
Earlier, at an extraordinary general meeting in Dublin, the bank again ruled out selling its College Green branch to the State.
Chairman, Pat Molloy said that the branch represented considerable value to shareholders. His remarks came after one shareholder said that giving the branch to the State would be a way of saying thanks to the taxpayer.
At the meeting, shareholders questioned why they should buy more shares in the bank as part of its rights issue and attacked the fees of €150m being paid to advisors.
If shareholders do not participate, they will see their holding in the bank further diluted. If they do, they hold their stake in what has been designated one of two pillar banks.
Shares not taken up by investors will be underwritten by the State through the National Pensions Reserve Fund. If no shareholders opt to take new shares, the State would end up with 69.7% of the bank.
Bank of Ireland is raising almost €2 billion fo the €5.2 billion in capital it needs through a bond exchange, under which most bondholders opted to take shares in the bank.
On Friday, it announced that talks with a number of private equity firms on making an investment in Bank of Ireland had not been successful. As a result, the State will not be taking up an option to go ahead with a placing which would have given it another 15% of the bank.
Meanwhile, the European Commission announced today that it had granted temporary approval to the recapitalisation of Bank of Ireland by the Government of up to €5.35 billion. This allows it to meet targets set by the Central Bank earlier this year.
Ruling to trigger insurance payments
Some junior bondholders in Bank of Ireland who suffered losses as a result of its bond buyback programme will be able to claim under insurance.
The International Settlements and Derivatives Association has decided that the losses on the bonds warrant a pay-out under the insurance measures known as credit default swaps (CDSs).
The ISDA ruled that a 'credit event' had occurred. A credit event is financial industry jargon which covers default on payment, breach of agreements or any other event that imposes losses on bondholders.
